Agreement and Contract

A proposal when accepted becomes a promise, and every promise and every set of promises forming the consideration for each other is an agreement. An agreement enforceable by law is a contract, for a lawful consideration and with a lawful object, and is not expressly declared by the Contract Act, 1872 to be void. An agreement not enforceable in law at the option of one or more of the parties thereto, to but not at the option of the other or others, is a Voidable contract. Persons Competent to contract


Every person is competent to contract:-

(i)           Who is of the age of majority according to the law to which he is subject,

(ii)         Who is of sound mind, and

(iii)        Who is not disqualified form contracting by any law to which he is subject. Under Sec. 3 of the Indian Majority Act, 1875 a minor becomes a major when he attains the age of 18 years except a minor of whose person or property or both a guardian has been appointed by any court, who becomes a major when he attains the age of twenty-one years. Sec. 12 of the Contract Act, 1872 lays down what is a sound mind for purposes of contracting.


Voidable agreements

An agreement into which a party has entered without free consent is a contract Voidable at the option of the party. Two or more persons are said to consent when they agree upon the same thing in the same sense. Consent is said to be free when it is not caused by: - (i) Coercion (Sec. 15, Contract Act) (ii) Undue influence (Sec. 16, Contract Act) (iv) Misrepresentation (Sec. 17, Contract Act) (v) Mistake (Sec. 20, 21 and 22 Contract Act) Thus a contract into which a party has been induced to enter on account of coercion, undue influence, fraud, misrepresentation or mistake is Voidable at his instance.


Void agreements

An agreement is void: (i) If the consideration for the object is unlawful (Sec. 24 Contract) (ii) If it is without consideration (Sec. 25 Contract) (iii) If it is in restraint of marriage (Sec. 26 Contract) (iv) If it is in restraint of trade or profession (Sec. 27 Contract) (v) If it is in restraint of legal proceedings (Sec. 28 Contract) (vi) If its meaning is not certain or capable of being made certain (Sec. 29 Contract Act) or (vii) If it is by way of wager (Sec. 30) The consideration or object of an agreement is lawful, unless: -

(i) It is forbidden by law; or

(ii) It is of such a nature that, if permitted, it would defeat the provisions of any law, or

(iii) Is fraudulent; or

(iv) Involves or implies injury to the person or property of another, or

(v) The court regards it as immoral or opposed to public policy.


Agreements binding on representatives

Legal representatives of parties have a right to require specific performance of a contract or are bound by the promise to perform the contract in the absence of a contrary intention. This does not apply where the obligation is personal in nature As a rule obligations under a contract cannot be assigned except with the consent of the promise. On the other hand, rights under a contract are assignable unless the contract is personal in nature or the rights are incapable of assignment either under the law or under the agreement between the parties. It is, however, usual to have a clause in a deed specifically stating that the parties shall include their executors, administrators, heirs, legal representatives and assigns.



It is not necessary for an agreement to be attested by any witness. But agreements are usually attested by one witness. Where registration is desired the agreement should be attested by two witnesses.


Stamp Duly

The stamp duty for different kinds of agreements varies from state to state. Agreement are covered by Article 5 of Schedule I to the stamp Act. While drafting an agreement the draftsman should ascertain the proper stamp duty having regard to the changes made in the Stamp Act. In the state where the agreement is executed.



Agreements not relating to immovable property and agreements not creating an interest in immovable property are not compulsory registrable. Only agreements creating an interest in immovable property worth more then Rs. 100/- are required be law to be registered.